Head to Head Comparison: Netflix (NFLX) and Care.com (NYSE:CRCM)

Care.com (NYSE: CRCM) and Netflix (NASDAQ:NFLX) are both consumer discretionary companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, earnings, profitability, risk, institutional ownership, analyst recommendations and dividends.

Risk & Volatility

Care.com has a beta of 0.94, suggesting that its stock price is 6% less volatile than the S&P 500. Comparatively, Netflix has a beta of 1.09, suggesting that its stock price is 9% more volatile than the S&P 500.

Earnings and Valuation

This table compares Care.com and Netflix’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Care.com $169.64 million 2.74 $8.45 million $0.10 156.42
Netflix $10.88 billion 7.93 $814.34 million $0.99 201.56

Netflix has higher revenue and earnings than Care.com. Care.com is trading at a lower price-to-earnings ratio than Netflix, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current ratings for Care.com and Netflix, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Care.com 0 1 1 0 2.50
Netflix 1 15 30 0 2.63

Care.com currently has a consensus price target of $14.00, indicating a potential downside of 10.49%. Netflix has a consensus price target of $206.18, indicating a potential upside of 3.33%. Given Netflix’s stronger consensus rating and higher probable upside, analysts plainly believe Netflix is more favorable than Care.com.

Profitability

This table compares Care.com and Netflix’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Care.com 3.66% 10.98% 4.67%
Netflix 4.04% 14.56% 2.87%

Institutional & Insider Ownership

73.7% of Care.com shares are owned by institutional investors. Comparatively, 81.0% of Netflix shares are owned by institutional investors. 24.7% of Care.com shares are owned by insiders. Comparatively, 4.9% of Netflix shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

Netflix beats Care.com on 11 of the 14 factors compared between the two stocks.

About Care.com

Care.com, Inc. is an online marketplace for finding and managing family care. As of December 31, 2016, the Company had 22.8 million members, including 12.9 million families and 9.9 million caregivers, spanning 19 countries. Its consumer matching solutions allow families to search for, qualify, vet, connect with and select caregivers. It also provides caregivers with solutions to create personal profiles, describe their skills and experience, and otherwise differentiate and market themselves in a fragmented marketplace. In addition to consumer matching solutions, the Company offers its members products and services to facilitate their interaction with caregivers. It serves employers by providing access to certain of its products and services to employer-sponsored families. In addition, it serves care-related businesses, such as day care centers, nanny agencies and home care agencies, willing to market their services to its care-seeking families and recruit its caregiver members.

About Netflix

Netflix, Inc. is a provider an Internet television network. The Company operates through three segments: Domestic streaming, International streaming and Domestic DVD. The Domestic streaming segment includes services that streams content to its members in the United States. The International streaming segment includes services that streams content to its members outside the United States. The Domestic DVD segment includes services, such as digital optical disc (DVD)-by-mail. The Company’s members can watch original series, documentaries, feature films, as well as television shows and movies directly on their Internet-connected screen, televisions, computers and mobile devices. It offers its streaming services both domestically and internationally. In the United States, its members can receive DVDs delivered to their homes. The Company had members streaming in over 190 countries, as of December 31, 2016.

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